A recent Victorian Civil and Administrative Tribunal (VCAT) decision reminds employers that failing to prevent workplace sexual harassment is a serious matter, and failing to engage with legal proceedings can make matters even worse.
Workplace sexual harassment is not just an employment issue—it's a workplace safety issue. It also shows that ignoring legal proceedings can have serious consequences.
A former employee of Spanish Doughnuts Franchising Pty Ltd has succeeded in their VCAT matter after the respondents repeatedly failed to comply with Tribunal directions over almost three years. A separate hearing will determine compensation, but the decision already sends a strong message about employer accountability.
The former employee alleged that they were subjected to repeated unwelcome sexual conduct by the company’s CEO, including inappropriate messages, comments, preferential treatment, unwanted attention and conduct during work-related travel. They claimed the behaviour created an intimidating, hostile and degrading workplace and ultimately forced them to resign.
It is important to note that VCAT did not reach its decision after hearing competing evidence at a full trial. Instead, it exercised its powers under section 78 of the Victorian Civil and Administrative Tribunal Act 1998, which allows VCAT to make orders, including determining a proceeding in favour of a party where another party has failed to comply with VCAT directions and has conducted the proceeding in a way that unnecessarily disadvantages the applicant.
Throughout the proceedings, Spanish Doughnuts repeatedly failed to comply with Tribunal orders requiring them to file their defence, witness statements and other evidence. They sought adjournments, claimed they were seeking legal representation and referred to health issues, but ultimately failed to provide the required material despite being given multiple opportunities to do so.
VCAT found these failures unnecessarily disadvantaged the former employee, whose anxiety was exacerbated by the lengthy delays. VCAT concluded that Spanish Doughnuts had been given every reasonable opportunity to participate and that determining the matter in the applicant's favour was an appropriate exercise of VCAT’s discretion.
Although the case was filed under Victoria's Equal Opportunity legislation, it also reinforces a growing recognition that workplace sexual harassment is fundamentally a work health and safety issue. Psychological health and safety obligations require employers to identify, assess and control hazards that can cause mental harm. Sexual harassment is now widely recognised as one of those hazards, capable of causing significant psychological injury, trauma, anxiety, depression and loss of employment.
The decision also highlights the risks where organisational structures leave employees without safe reporting pathways. According to the former employee, the alleged harasser was the company's CEO and there was no independent human resources person or process available to receive complaints. When senior leaders are the subject of allegations, organisations need alternative reporting mechanisms that employees can trust.
A significant lesson from this case is that organisations cannot ignore legal proceedings once allegations arise. Regulators, tribunals and courts expect employers to cooperate, provide evidence and comply with procedural directions. Failure to do so may result in adverse findings regardless of whether the underlying allegations have been fully tested through a contested hearing.
This VCAT decision also reminds employers that they should not wait until a complaint is raised or reaches court before acting. Employers have a positive duty under the Equal Opportunity Act to eliminate discrimination, sexual harassment and victimisation as far as possible – this means that positive action should be taken by employers to prevent these behaviours. Effective prevention requires respectful workplace policies, regular training, confidential reporting processes, prompt investigations and visible leadership commitment.
Creating psychologically safe workplaces is an essential component of occupational health and safety. Workers who feel safe to report inappropriate behaviour without fear of retaliation are more likely to speak up early, allowing issues to be addressed before they escalate. Workplace sexual harassment allegations demand serious attention from both employers and organisational leaders. Preventing harmful behaviour, responding promptly to complaints and engaging responsibly with legal processes are all essential parts of maintaining a safe and healthy workplace.
Read more: McColley v Spanish Doughnuts Franchising Pty Ltd [2026] VCAT 474 (22 June 2026)